Dyed Diesel Order Defers 24.4 Cents a Gallon Through 2026

President Trump signed an executive order Monday that lets trucks burn red-dyed diesel on public roads and defers the 24.4-cent federal fuel tax through 2026, the White House said.

If you run a high-ticket store like the ones we build at Ecommerce Paradise, your sofas, grills and generators ship LTL, and your carrier’s fuel surcharge rides on the price of diesel. My read after going through the numbers: the order helps truckers at the margin and will barely touch the freight line on your orders, so budget as if nothing changed.

This breakdown covers what the order does, what diesel has done since February, the math on a typical LTL bill, and five moves to make before Q4 volume lands. If you are new to the model, start with my guide to what high-ticket dropshipping is, because freight is the line item that decides whether these stores make money.

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Trump’s Dyed Diesel Order Defers a 24.4-Cent Tax Through 2026

The order, signed Monday, Oct. 5, directs the Treasury Department to defer the federal excise tax on on-road use of dyed diesel “for the remainder of the year without interest or penalties,” according to the White House fact sheet. It also tells Treasury to “explore pathways to eliminate the obligation to pay the deferred taxes.”

Dyed diesel is the same fuel as regular diesel. The red dye marks it as exempt from the federal highway tax so inspectors can catch off-road fuel in road vehicles, per Alan Krupnick, a senior fellow at Resources for the Future quoted by Fortune.

The federal tax is 24.4 cents a gallon, made up of a 24.3-cent excise tax and a 0.1-cent leaking underground storage tank fee, per Energy Information Administration figures cited by Fortune. On a 250-gallon fill-up that is about $61. The White House says truckers will save “over $100 per refill,” but Fortune notes that number assumes states also drop their own diesel taxes, which the order only encourages.

The order also encourages states to halt inspections and suspend state taxes on on-road dyed diesel, and the waiver runs through the end of 2026, according to Time. Ten states already allowed some on-road dyed diesel use before the order: Alabama, Arkansas, Indiana, Louisiana, Missouri, Nebraska, North Carolina, North Dakota, Oklahoma and Texas. Time also reports that most stations do not sell dyed diesel, so the direct pump-price benefit may be limited.

There is no start date and no implementing guidance yet. Henry Hanscom, chief advocacy and public affairs officer at the American Trucking Associations, said “we look forward to carefully reviewing the IRS’s implementing guidance once it is available,” per Trucking Dive. Trucking Dive summarizes his position as temporary penalty relief and potential tax deferral, not outright forgiveness.

Todd Spencer, president and CEO of the Owner-Operator Independent Drivers Association, said in a Tuesday statement that “wider use of red-dyed diesel will provide minimal relief,” per Trucking Dive.

Who backs it and who doubts it

Supporters point to farm country. American Farm Bureau Federation President Zippy Duvall wrote in an Oct. 1 letter to Trump that a federal tax waiver would “provide immediate cost relief for farmers, ranchers, and agricultural haulers,” according to Time. Trump said at a Nebraska rally that the order would “drive down the costs of all goods, including groceries,” per Time.

Economists are less convinced. Gilbert Metcalf, a visiting professor at MIT Sloan and a former Treasury deputy assistant secretary, told Fortune the order adds no diesel supply and U.S. refineries already run near record capacity. His point: shifting dyed diesel to road use could raise costs for the farmers who already buy it. Fortune’s framing is that the deferral is a 24-cent IOU, because the tax is delayed and not erased.

Diesel Peaked at $6.53 Before This Order Landed

The order is a reaction to a price spike. Per AAA figures cited by Time, diesel averaged about $3.52 a gallon at the start of 2026 and $3.76 before the Iran war began in late February. It peaked at $6.53 on Sept. 22 and averaged $6.32 on Monday. That is roughly 77% above January, and Time says it is on track for the largest year-over-year jump since AAA began tracking in 2000.

EIA data cited by Fortune put the national average near $6.20 for the week of Oct. 5. Trucking Dive reports the average was $3.71 a year ago. The drivers, per Fortune, are disrupted tanker traffic through the Strait of Hormuz and Russian diesel export restrictions after Ukrainian drone strikes on refineries.

Time’s example shows what that does to a single truck: a 250-gallon fill costs about $1,580 now, roughly $700 more than at the start of the year.

Earlier moves that did not fix it

Washington has tried other levers. The G7 agreed last week to release 100 million barrels of oil and diesel over four months, and the Jones Act waiver was extended in August, per Time. Trump also floated a diesel export ban in September before saying on Oct. 2 it would not happen. I covered that reversal and the carrier rate increases in my Oct. 3 freight post.

On the carrier side, Old Dominion announced a 4.9% general rate increase on Sept. 21, effective Oct. 5, on its 559, 670 and 550 tariffs, per Freight Intel Report. The same report notes Old Dominion’s revenue per hundredweight rose 11.3% in July and August including fuel but only 4.8% excluding fuel, while shipments per day fell 2.4% from a year earlier. By my math, fuel explains about 6.5 of those 11.3 points.

C.H. Robinson’s October LTL market update says carriers are “maintaining pricing discipline rather than cutting prices” and that no significant capacity crunch is expected. It expects LTL demand to grow in October as Q4 peak begins. Counterpoint to the doom view: capacity is stable, so this is a cost story, not a can’t-get-a-truck story.

The parcel side moved first. My post on FedEx fuel surcharges jumping to 32% covered that table, and the dyed diesel order does nothing to it.

What a 4% Diesel Cut Does to Your LTL Freight Bill

This section is my analysis, not reporting. Start with the size of the break. A 24.4-cent tax against a $6.20 gallon is about 3.9% of the price, which matches the roughly 4% Fortune cites.

Now run it through a freight bill. All numbers here are hypothetical. Say a pallet of outdoor furniture carries $400 of LTL linehaul and a 30% fuel surcharge, so $120 of fuel. If a 4% diesel price cut passed through perfectly and proportionally, the surcharge falls about $4.80. Old Dominion’s 4.9% rate increase on the same $400 linehaul adds $19.60. Net, the bill is still up about $14.80 per shipment in the best case.

The best case is generous. LTL carriers generally publish a fuel table tied to a weekly national diesel average, commonly the EIA’s, and the tables move in steps. Check your own tariff before assuming anything. Because most stations do not sell dyed diesel, the retail average that feeds those tables may barely move. A negotiated discount also changes your real number, and Freight Intel Report makes the same point about list rates versus what shippers pay.

Three scenarios and the thresholds I’d use

These are my planning lines, not carrier policy. If the weekly EIA average stays above $6.00 through the end of October, assume your surcharge stays where it is and keep your quotes padded. If it falls below $5.50, ask your carrier or 3PL whether your surcharge stepped down, because many shippers never ask. If it falls below $5.00, you have real room to renegotiate and to cut the freight cushion in your product pages.

Then there is the IOU risk. If the deferred tax is never erased, carriers that run dyed fuel owe it later. Whether that shows up in 2027 rates is speculation on my part, and I’d treat it as a reason not to bake a diesel discount into next year’s pricing. I’m not a tax or legal advisor, so have your carrier or CPA confirm anything tied to the excise tax itself.

Where the real freight pressure sits

The demand side is not helping. My read on falling consumer confidence and the Fed hike is that shoppers are already cautious on big carts. Meanwhile my breakdown of the Adobe holiday forecast shows furniture still growing. Cautious buyers plus rising freight is a margin squeeze.

Big retailers are building capacity for exactly your category. Walmart’s $300M Ohio hub for furniture and TVs is one example. Amazon’s new LTL labels for bulky sellers are another. A dropshipper cannot match their freight contracts, so you win on selection, service and quote accuracy.

The consolidation story matters too. C.H. Robinson’s purchase of RXO puts two big-and-bulky players under one roof, and fewer independent options usually means less bargaining power for small shippers.

For parcel-sized items, compare live carrier rates in Easyship before you lock a flat shipping rate. For everything LTL, use the framework in my post on quoting freight without eating the margin.

If re-running freight math every time diesel moves sounds like a second job, that is the work my team takes off store owners through the turnkey done-for-you service. You keep the margin and skip the spreadsheet.

Diesel went from $3.76 to $6.53 in seven months. Compare freight quotes and surcharge tables with other store owners and me inside the community. Join the Skool community →

Five Freight Moves for Your Store Before Q4 Peak Orders

Here are the five moves I’d make this week, in order of how fast they pay off.

Pull your fuel surcharge table. Ask every LTL carrier and 3PL you use which diesel index they follow, which week’s number they use, and how many steps the table has. Put the answers in one sheet so you can see when a drop actually reaches your invoice.
Shorten your freight quote shelf life. On oversized orders, quote freight for 48 hours, not 30 days. My guide to dropshipping industrial equipment walks through the freight-first quoting flow.
Re-run margin per SKU with today’s all-in freight. Add the 4.9% rate increase and current fuel to your top 20 SKUs. Anything below your minimum margin gets a price bump or a freight line item. Track it in Finaloop. Then read why your payout is not your profit before you trust any dashboard.
Move volume to closer suppliers. Shorter lanes mean smaller linehaul and a smaller fuel percentage. Look at domestic catalogs in Inventory Source first. Then compare them against Wholesale2b.
Fix your delivery messaging before Prime Big Deal Days traffic and Q4 peak. Update your shipping rates in Shopify Markets. Then set up delay emails in Klaviyo. Add tracking through AfterShip so slow freight does not become chargebacks.

The Markets change is covered in my post on Shopify moving shipping rates into Markets. If your store still runs on a patchwork of apps, rebuilding it on Shopify with freight as a pricing input is the cleaner fix.

If you want a second set of eyes on your freight math, book a call at my discovery page. If supplier onboarding is the bottleneck, my team can take it on through the scaling service.

Frequently Asked Questions

Does the dyed diesel order lower my LTL fuel surcharge?
Probably not by much. A 24.4-cent tax is about 4% of a $6.20 gallon, most stations do not sell dyed fuel, and the carrier’s table decides the pass-through. My peak surcharge post shows how parcel carriers stack their fees on top.

When does the order take effect?
The White House fact sheet gives no effective date and says the deferral runs for the remainder of 2026. Trucking Dive reports the industry is waiting on IRS implementing guidance.

Can carriers legally run dyed diesel on highways now?
The order temporarily allows it and encourages states to ease enforcement, but states set their own rules, and ten already allowed some use, per Time. I’m not a legal advisor, so that question belongs to your carrier.

Will FedEx and UPS cut fuel surcharges because of this?
None of the coverage I reviewed says so. Their tables follow their own indexes, and my post on the FedEx rate hike and oversize jump shows the bigger increases are in base rates and fees.

Should I raise prices on big items now?
If freight is a large share of the order and your margin is thin, yes or add a separate freight line. A free list of lower-freight categories sits at my niches list.

Does a 3PL protect me from fuel swings?
Not by itself, since the 3PL passes carrier costs through. Compare terms using my guide to choosing a 3PL fulfillment partner.

Tired of re-running freight math every time fuel moves? Let my team build and run your high-ticket store for you. See the turnkey done-for-you service →

Diesel will keep moving, and your quotes have to move with it. Subscribe to the YouTube channel for daily breakdowns. More breaking news coming through the day.

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Trevor Fenner

Trevor Fenner is an ecommerce entrepreneur and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.